CHAMPION FOREVER GROUP LTD v. ADDCHANCE DYEING FACTORY LTD

CHAMPION FOREVER GROUP LTD v. ADDCHANCE DYEING FACTORY LTD

The strike out application was dismissed. The Court held that on the pleaded facts the plaintiffs sufficiently identified proprietary rights (including the right to discharge the 2nd Mortgage and the right to the unencumbered Tower) which could have been wrongfully transferred in breach of Poon's fiduciary duties and thereafter received by Champion; it was not plain and obvious that the knowing receipt cause of action was unsustainable, and the issues should be resolved at trial.

Citation
[2022] HKCFI 1799
Parties
1st Plaintiff: Sung Chung Kwun; 2nd Plaintiff: Addchance Dyeing Factory Limited; 3rd Plaintiff: Powerlink Industries Limited; 1st Defendant: Addchance Holdings Limited (now known as GTI Holdings Limited); 2nd Defendant: Champion Forever Group Limited; 3rd Defendant: Addchance Limited; 4th Defendant: Chinakey (Hong Kong) Limited; 5th Defendant: Sky Emperor International Limited; 6th Defendant: Poon Sum; 7th Defendant: Hammer Capital; Unnumbered Defendant: Private Investments Limited; 8th Defendant: Champion Alliance Industries Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 June 2022
Case Number
HCMP2556/2017
Procedural Posture
Civil (equity/trusts) / Interlocutory Strike Out Application
Outcome
Application to strike out dismissed
Legal Topics
Knowing Receipt, Constructive Trust, Fiduciary Duty, Proprietary Remedies, Bona Fide Purchaser, Striking Out Under Order 88
Source Language
EN
Equity Trusts Property Civil Procedure Injunctions Knowing Receipt Constructive Trust Fiduciary Duty +3 more

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Parties

Sung Chung Kwun

1st Plaintiff

Addchance Dyeing Factory Limited

2nd Plaintiff

Powerlink Industries Limited

3rd Plaintiff

Addchance Holdings Limited (now known as GTI Holdings Limited)

1st Defendant

Champion Forever Group Limited

2nd Defendant

Addchance Limited

3rd Defendant

Chinakey (Hong Kong) Limited

4th Defendant

Sky Emperor International Limited

5th Defendant

Poon Sum

6th Defendant

Hammer Capital

7th Defendant

Private Investments Limited

Unnumbered Defendant

Champion Alliance Industries Limited

8th Defendant

Procedural Posture

Civil (equity/trusts) / Interlocutory Strike Out Application

Legal Issues

  1. 1 Whether the amended statement of claim discloses a reasonable cause of action in knowing receipt
  2. 2 Whether the plaintiffs had a pre-existing or continuing proprietary interest in the property received by Champion Forever
  3. 3 Whether a valid assignment to a bona fide purchaser defeats a knowing receipt claim or whether equitable title can revive when property is acquired by a trustee or related party

Ratio Decidendi

The strike out application was dismissed. The Court held that on the pleaded facts the plaintiffs sufficiently identified proprietary rights (including the right to discharge the 2nd Mortgage and the right to the unencumbered Tower) which could have been wrongfully transferred in breach of Poon's fiduciary duties and thereafter received by Champion; it was not plain and obvious that the knowing receipt cause of action was unsustainable, and the issues should be resolved at trial.

Court Disposition

Application to strike out dismissed

Orders

  • Application to strike out dismissed
  • Champion Forever Group Limited to pay the costs of and incidental to the striking out application (including any costs reserved) with Certificate for Counsel